The state universal service mechanisms for high cost service in rural areas, state matching funds for the federal low income Lifeline assistance program, and other functions such as E911 and TTY, have been funded through assessments paid by traditional landline phone companies. Over the years, however, many customers have migrated to other providers that provide telephone service with other technologies, such as cable, and these have not been providing Lifeline assistance. In addition, other problems have arisen that have led to a major decline in the provision of Lifeline assistance, with the result that many eligible customers are not receiving it. One result has been that hundreds of millions of dollars of federal surcharges assessed on New Yorkers' phone bills are being sent to the federal Universal Service Administrative Company for redistribution to benefit low-income customers in other states while fewere and fewer of New York's growing low income population receive the benefits.
The role and function of the Targeted Accessibility Fund ("TAF"), which was created at the request of the PSC to administer state universal service funds, needs to be revised and expanded. As a result of the migration of customers to services that do not contribute equally to TAF, the revenues available to support universal service functions are dwindling even as the need grows, for example, with the increase in the population eligible for Lifeline assistance due to rising unemployment. Some states have used entities similar to TAF to begin to address the problem of making broadband service, increasingly seen as a necessary utility service, available and affordable to all.
According to the PSC Notice,
It now appears that the Transition Fund could exhaust in the next 18 to 24 months. Accordingly, a proceeding is instituted to examine the issues raised by the exhaustion of the Transition Fund, universal service generally, and, more specifically, the future of the State’s traditional wireline telephone providers.Among the issues are the advisability of modifications to existing universal service funding regimes to address issues related to the sources of financial support for the State’s incumbent wireline telephone companies, and how best to maintain or modify existing support mechanisms for socially- beneficial telephone services, such as Lifeline and 911, in the increasingly dynamic telecommunications market in our State. Jurisdictional and universal service fund issues raised in the Commission’s Competition 3 proceeding should also be considered. There are many other complex issues that may merit consideration in the course of this proceeding. The parties are invited and encouraged to identify additional issues that they consider to be relevant to this inquiry.The Notice indicates that the case has been assigned to an Administrative Law Judge who will develop a record for bringing a recommendation for action to the PSC. Persons and organizations interested in being active parties in the case are asked to indicate that by August 14, 2000, by following the instructions in the Notice.